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Tax Indemnification Agreement

Tax Indemnification Agreement Template for Malaysia

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Key Requirements PROMPT example:

Tax Indemnification Agreement

"I need a Tax Indemnification Agreement for the sale of my Malaysian manufacturing company to a Singapore-based buyer, with the agreement taking effect from March 1, 2025, covering historical tax liabilities for the past 7 years and including specific provisions for ongoing tax audits."

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Document background
The Tax Indemnification Agreement serves as a critical risk allocation tool in Malaysian business transactions, particularly in mergers, acquisitions, corporate restructurings, and joint ventures. This document becomes essential when parties need to clearly define responsibility for historical or future tax liabilities, ensuring protection against unexpected tax exposures. The agreement, governed by Malaysian law, typically follows significant corporate transactions where tax risks need to be allocated between parties. It details specific tax matters covered, claim procedures, and payment obligations, incorporating provisions that align with Malaysian tax legislation, including the Income Tax Act 1967 and related regulations. The document is particularly valuable in complex corporate structures or transactions where tax exposure could be significant.
Suggested Sections

1. Parties: Identification of the indemnitor and indemnitee, including full legal names and registration details

2. Background: Context of the agreement, including the underlying transaction or relationship giving rise to the tax indemnification obligation

3. Definitions: Definitions of key terms including 'Tax', 'Tax Authority', 'Tax Liability', 'Indemnified Taxes', and other relevant terms

4. Scope of Indemnification: Clear delineation of which taxes and tax-related costs are covered by the indemnification

5. Indemnification Obligations: Core provisions detailing the indemnitor's obligations to pay, reimburse, or otherwise compensate the indemnitee for covered tax liabilities

6. Payment Mechanics: Procedures and timeframes for making indemnification payments, including currency and method of payment

7. Tax Procedures: Process for handling tax audits, assessments, and disputes covered by the indemnification

8. Representations and Warranties: Statements regarding tax matters and authority to enter into the agreement

9. Notice Requirements: Procedures for notifying the indemnitor of tax claims or liabilities

10. Duration and Survival: Term of the agreement and which provisions survive termination

11. Governing Law and Jurisdiction: Specification of Malaysian law as governing law and jurisdiction for disputes

Optional Sections

1. Change in Law Provisions: Addresses how changes in tax laws or regulations affect the indemnification obligations

2. Third Party Claims: Procedures for handling tax claims involving third parties

3. Tax Gross-Up: Provisions ensuring that indemnification payments are made on an after-tax basis

4. Set-off Rights: Rights to set off indemnification payments against other payment obligations

5. Security Provisions: Requirements for security or collateral to support indemnification obligations

6. Tax Benefit Adjustments: Mechanisms for adjusting indemnification payments to account for tax benefits received by either party

7. Dispute Resolution: Alternative dispute resolution procedures for tax-related disputes

Suggested Schedules

1. Schedule 1 - Covered Taxes: Detailed list of specific taxes and tax matters covered by the indemnification

2. Schedule 2 - Calculation Methodology: Methods and formulas for calculating indemnification amounts

3. Schedule 3 - Claims Procedures: Detailed procedures for making and processing indemnification claims

4. Schedule 4 - Required Notices: Forms and templates for required notices under the agreement

5. Appendix A - Tax Compliance Certificates: Copies of relevant tax compliance certificates and documentation

6. Appendix B - Power of Attorney: Form of power of attorney for handling tax matters with authorities

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Agreement
Applicable Law
Assessment
Business Day
Claim Notice
Completion Date
Covered Taxes
Effective Date
Government Authority
Indemnified Party
Indemnifying Party
Indemnified Amount
Loss
Malaysian Ringgit
Payment Date
Pre-Completion Period
Post-Completion Period
Related Party
Relevant Tax Authority
Tax
Tax Assessment
Tax Authority
Tax Benefit
Tax Claim
Tax Dispute
Tax Documentation
Tax Indemnity
Tax Liability
Tax Loss
Tax Notice
Tax Payment
Tax Period
Tax Proceeding
Tax Rate
Tax Return
Tax Saving
Tax Warranty
Taxation
Third Party Claim
Relevant Industries

Financial Services

Manufacturing

Real Estate

Oil and Gas

Technology

Telecommunications

Mining and Resources

Healthcare

Construction

Retail and Consumer Goods

Relevant Teams

Legal

Finance

Tax

Compliance

Risk Management

Treasury

Corporate Development

Mergers & Acquisitions

Internal Audit

Corporate Secretarial

Relevant Roles

Chief Financial Officer

Tax Director

Legal Counsel

Corporate Secretary

Finance Manager

Tax Manager

Compliance Officer

Risk Manager

Treasury Manager

Financial Controller

M&A Director

Corporate Development Manager

Industries
Income Tax Act 1967: Primary legislation governing taxation in Malaysia, establishing the basis for income tax assessment, collection, and enforcement. Essential for understanding tax obligations that may be subject to indemnification.
Contracts Act 1950: Fundamental law governing contract formation, validity, and enforcement in Malaysia. Crucial for ensuring the tax indemnification agreement meets legal requirements for binding contracts.
Stamp Act 1949: Governs the stamping of documents and associated duties. Relevant for proper execution of the agreement and any tax implications related to stamp duty.
Finance Act (Latest Version): Annual legislation that may modify tax laws and introduce new tax provisions. Important for staying current with tax amendments that could affect the indemnification terms.
Real Property Gains Tax Act 1976: Relevant if the tax indemnification involves property transactions or gains from property disposals.
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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